1. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning The Operations Plan describes the production management system. It describes what you produce and how you produce it.

2. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning This section should be one of the easier sections for a producer to develop. But planning is easy, implementation is the hard part.

3. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning Operations/production management is one of the most important aspects of running a farm business. Production level or yield is the single most important factor determining the cost of production.

4. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning There is rarely one area where significant cost reductions can be attained. The key to more profitable businesses is managing many costs two to five percent more efficiently than their competitors.

5. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning In the operations section of a business plan, the business manager needs to adequately communicate that the business has a sound production management strategy.

6. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning What are the critical operational procedures that make will make the business successful? The operations plan should document the critical operational functions that are critical for success.

7. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning Do you know the critical operational functions that will determine your business’s success? It is the critical function that you don’t identify that can kill your business.

8. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning When starting a new enterprise, visit similar business’s to identify critical operational factors. This is particularly important if you are starting a new or creative niche operation.

9. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning To communicate the Operations plan, this section should discuss: The products produced The production system Quantity produced Production schedule

10. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning Operations should discuss: Resources available and needed Permits and regulations Risk management plan Environmental issues Quality control systems

11. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning The operations section should also help the business manager think through and identify production functions that can be improved.

12. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Plan Marketing and operations are closely related. Which plan should you develop first?

13. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Plan You may want to ask: Should I determine my marketing opportunities and produce to meet the marketing plan? Or should I determine my competitive production capacity and develop markets for my products?

14. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Plan Traditionally agricultural producers focused on products they had a competitive advantage producing. Today there is a growing focus on determining marketing opportunities and producing to meet demand.

15. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Plan Your approach may depend on whether you are focused on: Producing a commodity – competitive production advantage focus Producing a niche product – market demand focus

16. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Operations Planning The production plan may also address how the business will: Produce value-added products Specialize on a product or a few products Diversify the product line Transition to a new or niche products

17. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Resources Guide worksheets Risk management – worksheet 4.24

18. Copyright © 2003 Center for Farm Financial Management, University of Minnesota Resources FINPACK Business Plan software Crop system Livestock system Other enterprises Risk management plan Environmental considerations Quality control systems